This Communication analyses the strategic dimensions of EU-Mercosur relations and assesses their development. It also proposes a long-term strategy for an inter-regional association between the EU and Mercosur

ACT

Communication from the Commission to the Council and the European Parliament of 19 October 1994. "The European Community and Mercosur - An enhanced policy" [COM(94)428 - Not published in the Official Journal].

SUMMARY

This communication follows on from the conclusions of the Corfu European Council of June 1994, which confirmed the European Union's intention to strengthen its relations with Mercosur. The Commission analyses the strategic dimensions of relations between the European Union and Mercosur, evaluates the development of Mercosur and its current relations with the EU and proposes concluding, in the short term, a framework agreement on economic and trade cooperation with a view to establishing, in the longer term, an interregional association between the European Union and Mercosur.

The Commission envisages strengthening the EU's relations with the various regional groupings in Latin America and particularly Mercosur as a complement to the relations established with Latin America at regional and bilateral level.

Mercosur, a common market set up in 1991 with the signature of the Treaty of Asuncíon by Argentina, Brazil, Paraguay and Uruguay, aims to improve the competitiveness of its members by establishing a customs union, a progress begun in 1995. It also covers many other fields, particularly the fiscal, monetary, industrial and agricultural policies. It has proven to be of great interest for other Latin American countries.

The European Union is Mercosur's largest trading partner and the largest foreign investor in the region. The Commission stresses that Mercosur is a new growth area at global level and a key strategic region for Europe.

In this context, and after reviewing the various options for developing trade between the two regions, the Commission proposes a strategy to enhance the European Union's relations with Mercosur. It is a dynamic strategy divided into two stages, and progress is determined by the development of Mercosur itself.

The first stage is an intermediate stage involving the conclusion of an Interregional Framework Agreement on trade and economic cooperation that would cover the following areas:

preparations for trade liberalisation, as envisaged in the long term by the association;

support for the integration of Mercosur in three areas: commercial, especially as regards harmonisation; economic, through technical assistance for the establishment of the internal market; and regional, through technical, industrial and financial support for major regional projects;

enhancing dialogue and consultations between the European Union and Mercosur at ministerial level on policy and cooperation issues of common interest.

The second stage involves the creation of an interregional association between the European Union and Mercosur, which is the long-term objective. This association would be based on a balanced and mutual partnership at political, economic and commercial level aimed at:

promoting an increase in interregional trade of mutual benefit, particularly in the context of the implementation of the Uruguay Round conclusions;

promoting strategic investment for companies;

strengthening political cooperation at international level, in particular by adopting common positions in international bodies on issues of mutual interest;

ensuring more effective external action by the European Union by establishing a new framework for relations between similar partners.

The central aspects of this association could be:

flexible and gradual establishment of a free trade area for industry and reciprocal and gradual liberalisation of agricultural trade;

cooperation and dialogue on trade issues;

liberalisation of movements of services and capital;

joint financing instruments for regional projects;

cooperation on information, communication and culture;

interinstitutional cooperation;

political cooperation and coordination on international issues;

cooperation on the information society, information technology and telecommunications, together with industrial cooperation.

RELATED ACTS

The negotiating directives for the conclusion of an Interregional Association Agreement between the EU and Mercosur were adopted by the Council on 17 September 1999 on the basis of the Interregional Framework Cooperation Agreement signed on 15 December 1995. Formal negotiations began in April 2000 in Buenos Aires.

Substantial progress has been made with political dialogue and cooperation since April 2000. As regards trade, the EU and Mercosur have exchanged tariff offers and negotiating texts on goods and services. An action plan for business facilitation was also adopted at the Madrid summit in 2002.

The last EU-Mercosur ministerial meeting for political dialogue in Vouliagmeni (Athens, 27 March 2003) covered such subjects as development and the process of regional integration between the EU and Mercosur, evaluation of the EU-Mercosur negotiations, enhancing political cooperation between the EU and Mercosur in international bodies, and new challenges in the international situation.

Since May 2004 negotiations have been conducted through informal technical meetings between Mercosur and the EU.

At a ministerial-level meeting in October 2004 in Lisbon, Mercosur and EU ministers reiterated the importance they attached to negotiating an inter-regional association agreement, which would be an important factor in developing closer political, economic and trade links between the EU and Mercosur.

Recently in Luxembourg the ministers recalled the commitments made in the Lisbon declaration of 20 October 2004 to continue negotiations and call a ministerial-level meeting for this purpose supported by prior technical preparation. This meeting will be held in the second half of 2005.

On 25 September 2002 the Commission adopted a regional indicative programme of EUR 48 million for EU-Mercosur cooperation in the period 2002-2006. Its priorities are consolidating the Mercosur internal market, stepping up Mercosur regional integration and supporting civil society.

The Commission is now preparing a second regional indicative programme for EU-Mercosur cooperation in the period 2007-2013.